Why CUs Shouldn't Wait To Move To Electronic Liens, Titles

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Due to unprecedented budget deficits state governments throughout the country are desperately seeking ways to cut costs wherever possible. States realize that many of their departments are paper intensive. One method they are employing to eliminate expense is replacing paper vehicle titles with paperless ones for lienholders such as credit unions in the Department of Motor Vehicles.


ELTs Offered In Some States
Several states offer paperless vehicle titles (also known as Electronic Lien and Title, or ELT) as an option to lienholders who finance auto loans for new and used vehicles. Paperless vehicle titles reduce costs for both the DMV and the lienholder by eliminating expensive paper and printing and mailing costs associated with lien perfection and satisfaction. Paperless titles also reduce the time spent handling, storing and retrieving titles and correcting errors and exceptions. The CUs I work with have found paperless titles a big improvement to the manual collateral management they have performed in the past.

Thirteen states have fully operational ELT programs (Arizona, California, Florida, Georgia, Hawaii, Idaho, Massachusetts, New York, Ohio, Pennsylvania, South Carolina, Virginia and Washington). Other states, such as Texas and Louisiana, are introducing paperless titles now.

An important trend taking place in the DMV industry is the push to move all lienholders to paperless titles as quickly as possible in order to guarantee cost savings for the state. Pennsylvania became the first state in 2008 to legislate the use of paperless titles by lienholders. Other states such as Arizona have recently passed legislation to move all lienholders to paperless titles by June 2010. Louisiana passed legislation moving all lienholder to paperless by January 2010, and legislation will soon be on the governor's desk in California to move all lienholders to paperless titles by January 2012.

Credit unions operating in states that have ELT must prepare themselves for the eventual and inevitable shift to paperless vehicle titles. Preparing for the transition now gives credit unions ample opportunity to select a vendor that fits best with their corporate culture, train staff members to use the technology efficiently and become fully operational before their state governments move lienholders away from paper titles.

It is more cost effective for most credit unions to use off-the-shelf software than to build their own interfaces with the DMV because each state has its own unique data ELT specifications. Title management software providers offer low-cost ELT solutions as a "Software as a Service" (SaaS) to credit unions to help them process paperless titles.


Don't Wait Around 
Waiting for the state government to require the use of paperless titles before adopting ELT is not in the best interests of the credit union. By implementing the technology on their own terms, credit unions can manage the implementation process according to their internal timelines and not those of their state government. Another benefit to adopting ELT sooner rather than later is credit unions do not need to vie for the attention of service providers that are adding late adopter lienholders who waited until the state-imposed deadline to comply.

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